Dillard's 2004 Annual Report Download - page 22

Service Charges, Interest and Other Income
(in millions of dollars) Dollar Change Percent Change
2004 2003 2002 2004-2003 2003-2002 2004-2003 2003-2002
Joint venture income $ 8.7 $ 8.1 $ 19.5 $ 0.6 $(11.4) 7.4
%
-58.5
%
Gain on sale of joint venture and
property and equipment 2.9 24.3 65.4 (21.4) (41.1) -88.1 -62.8
Gain on sale of credit card business 83.9 - - 83.9 - - -
Service charge income 141.2 207.9 225.7 (66.7) (17.8) -32.1 -7.9
Income from GE marketing and
servicing alliance 14.2 - - 14.2 - - -
Other 36.8 24.4 12.3 12.4 12.1 50.8 98.4
Total $ 287.7 $ 264.7 $ 322.9 $ 23.0 $(58.2) 8.7
%
-18.0
%
Average accounts receivable (1) $1,101.2 $1,231.4 $1,330.9 $(130.2) $(99.5) -10.6
%
-7.5
%
(1) Average receivables for 2004 includes only the first nine months prior to the sale
2004 Compared to 2003
The Company completed its sale of its credit card business to GE and entered into a ten year marketing and servicing
alliance. GE will own the accounts and balances generated during the term of the alliance and will provide all key
customer service functions supported by ongoing credit marketing efforts. Included in other income in fiscal 2004 is a
gain of $83.9 million relating to this sale. Also included is the income from the marketing and servicing alliance since
the inception of the agreement of $14.2 million offset by a reduction in service charge income due to the sale of the
credit card business during the fourth quarter of 2004. Service charge income decreased $66.7 million due to the
decrease noted above and an average decrease of $135 million in the amount of outstanding accounts receivable during
2004, prior to the sale, compared to 2003. Included in the gain on sale of joint ventures and property and equipment in
fiscal 2003 is a gain of $15.6 million relating to the sale of the Company’s interest in Sunrise Mall and its associated
center in Brownsville, Texas. Due to the sale of the credit card business, service charge income will be non-recurring in
fiscal 2005; however, income from the marketing and servicing alliance will be expected for the full fiscal year.
2003 Compared to 2002
Included in other income in fiscal 2003 is a gain of $15.6 million relating to the sale of the Company’s interest in Sunrise
Mall and its associated center in Brownsville, Texas. Included in other income in fiscal 2002 is a $64.3 million gain
pertaining to the Company’s sale of its interest in the FlatIron Crossing joint venture located in Broomfield, Colorado.
Service charge income decreased due to a $99 million decrease in the average amount of outstanding accounts receivable
during 2003 compared to 2002. The decrease in accounts receivable was due to a 140 basis point decline in sales
penetration on the Company’s proprietary credit card coupled with a 4% decline in overall retail sales during fiscal 2003
compared to the prior year. Sales on the Company’s proprietary credit cards as a percent of total sales were 26.8%,
28.2% and 28.8% for fiscal 2003, 2002 and 2001, respectively. Also included in other income are realized gains on the
sale of property and equipment of $8.7 million and $1.1 million for fiscal 2003 and fiscal 2002, respectively. Earnings
from joint ventures declined due to the Company’s sale of FlatIron Crossing in fiscal 2002 and the sale of Sunrise Mall
in the first quarter of fiscal 2003.
Income Taxes
The Company’s actual federal and state income tax rate (exclusive of the effect of nondeductible goodwill write off) was
36% in fiscal 2004, 2003 and 2002.
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